Republican platform to offer sop to Paul supporters: another gold commission: GATA | THE GATA DISPATCH

Republican platform to offer sop to Paul supporters: another gold commission

Submitted by cpowell on 05:43PM ET Thursday, August 23, 2012. Section: Daily Dispatches Republicans Eye Return to Gold Standard
By Robin Harding and Anna Fifield
Financial Times, London
Thursday, August 23, 2012

http://www.ft.com/intl/cms/s/0/06ebfdaa-ed3f-11e1-83d1-00144feab49a.html

The gold standard has returned to mainstream US politics for the first time in 30 years, with a "gold commission" set to become part of official Republican Party policy.
Drafts of the party platform, which it will adopt next week at a convention in Tampa, Florida, call for an audit of Federal Reserve monetary policy and a commission to look at restoring the link between the dollar and gold.

The move shows how five years of easy monetary policy -- and the efforts of libertarian congressman Ron Paul -- have made the once-fringe idea of returning to gold as money a legitimate part of Republican debate.

 Marsha Blackburn, a Republican congresswoman from Tennessee and co-chair of the platform committee, said the issues were not adopted merely to placate Mr. Paul and the delegates he picked up during his campaign for the party's nomination.

"These were adopted because they are things that Republicans agree on," Ms. Blackburn told the Financial Times. "The House recently passed a bill on this, and this is something that we think needs to be done."
The proposal is reminiscent of the Gold Commission created by former president Ronald Reagan in 1981, 10 years after Richard Nixon broke the link between gold and the dollar during the 1971 oil crisis. That commission ultimately supported the status quo.

"There is a growing recognition within the Republican party and in America more generally that we're not going to be able to print our way to prosperity," said Sean Fieler, chairman of the American Principles Project, a conservative group that has pushed for a return to the gold standard.

A commission would have no power except to make recommendations, but Mr. Fieler said it would provide a chance to educate politicians and the public about the merits of a return to gold. "We're not going to go from a standing start to the gold standard," he said.

The Republican platform in 1980 referred to "restoration of a dependable monetary standard," while the 1984 platform said that "the gold standard may be a useful mechanism." More recent platforms did not mention it.

Any commission on a return to the gold standard would have to address a host of theoretical, empirical, and practical issues.

Inflation has remained under control in recent years, despite claims that expansion of the Fed's balance sheet would lead to runaway price rises, while gold has been highly volatile. The price of the metal is up by more than 500 per cent in dollar terms over the past decade.

A return to a fixed money supply would also remove the central bank's ability to offset demand shocks by varying interest rates. That could mean a more volatile economy and higher average unemployment over time.

On the campaign trail in New Mexico on Thursday, Republican presidential hopeful Mitt Romney said it was "a real achievable objective" for the U.S. to reach energy independence by 2020, touting his plan to open a stretch of the southeast coast for oil development and speed up drilling on federal lands.

GATA | THE GATA DISPATCH: LCH.Clearnet starts accepting gold as collateral

LCH.Clearnet starts accepting gold as collateral

Submitted by cpowell on 09:49AM ET Wednesday, August 22, 2012. Section: Daily Dispatches By Alex MacDonald
Dow Jones Newswires
via Fox Business
Tuesday, August 21, 2012

http://www.foxbusiness.com/news/2012/08/21/lchclearnet-to-accept-gold-as...

U.K.-based clearinghouse LCH.Clearnet Group Ltd. said Tuesday it will accept a certain specification of gold bullion called loco London gold as collateral for margin-cover requirements on over-the-counter precious-metals forward contracts and on Hong Kong Mercantile Exchange precious-metals contracts starting Aug. 28.
LCH.Clearnet Group Ltd. has already been using gold as collateral since 2011 but now will accept loco London gold as collateral. Loco London gold is equivalent to a 400-ounce bar, or 12.5 kilograms of gold, that is stored in London.
The push to use gold as collateral follows similar steps from a growing number of exchanges and banks to increase the use of gold as an acceptable deposit, reinforcing the precious metal's allure as an alternative currency.

 CME Clearing Europe, the London-based clearinghouse of CME Group Inc., announced last Friday that it planned to accept gold bullion as collateral for margin requirements on over-the-counter commodities derivatives.

IntercontinentalExchange Inc. (ICE) also uses gold as collateral.
LCH.Clearnet Group Ltd. said it would limit the amount of loco London gold that could be used as collateral to 40% of the total margin-cover requirement for a member across all products and a maximum of $200 million, or roughly 130,000 troy ounces, per member group.

LCH.Clearnet also said it would apply a haircut of 14% to the use of gold as collateral. The haircut is in keeping with similar actions taken by CME Clearing Europe.

Clearinghouses apply haircuts across a wide range of asset classes to reduce pricing risk should the collateral asset, whether gold or government securities, depreciate in value.

Clearinghouses sit in the middle of a transaction, assuming the counterparty risk involved when two parties trade. Initial and variation margins are collected from members to fulfill their obligations should any problems arise.

* * *

Join GATA here:
Toronto Resource Investment Conference
Thursday-Friday, September 27-28, 2012
Toronto Sheraton Centre Hotel
Toronto, Ontario, Canada
http://www.cambridgehouse.com/event/toronto-resource-investment-conferen...

GATA | THE GATA DISPATCH: Ignore GFMS misinformation, Embry tells King World News

Ignore GFMS misinformation, Embry tells King World News

Submitted by cpowell on 05:29PM ET Monday, August 20, 2012. Section: Daily Dispatches 8:25p ET Monday, August 20, 2012
Dear Friend of GATA and Gold:
Sprott Asset Management's John Embry today tells King World News that the GFMS metals consultancy is a long-time purveyor of misinformation about gold and should be ignored. Western central banks, Embry adds, are operating another version of the London Gold Pool of the 1960s and it will work until it doesn't and in the meantime they are setting gold up for a "massive move." Embry's interview is posted at the King World News blog here:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/20_Em...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

GATA | THE GATA DISPATCH: Ron Paul: Legalize competing currencies

Ron Paul: Legalize competing currencies

Submitted by cpowell on 08:21AM ET Monday, August 13, 2012. Section: Daily Dispatches By U.S. Rep. Ron Paul
Monday, August 13, 2012

http://paul.house.gov/index.php?option=com_content&task=view&id=2003&Ite...

I recently held a hearing in my congressional subcommittee on the subject of competing currencies. This is an issue of enormous importance, but unfortunately few Americans understand how the Federal Reserve and Treasury Department impose a strict monopoly on money in America.

This monopoly is maintained using federal counterfeiting laws, which is a bit of a stretch. If any organization is guilty of counterfeiting dollars, it is the Federal Reserve. But those who dare to challenge federal legal tender laws by circulating competing currencies -- at least physical currencies -- risk going to prison.
Like all government-created monopolies, the federal monopoly on money results in substandard product in the form of our ever-depreciating dollars.

Yet governments have always sought to monopolize the issuance of money, either directly or through the creation of central banks. The expanding role of the Federal Reserve in the 20th century enabled our federal government to grow wildly larger than would have been possible otherwise.

Our Fed, like all central banks, encourages deficits by effectively monetizing Treasury debt. But the price we pay is the terrible and ongoing debasement of our money.

Allowing individuals and business to use alternate currencies, especially currencies backed by gold and silver, would expose the whole rotten system because the marketplace would prefer such alternate currencies unless and until the Fed suddenly imposed radical discipline on its dollar inflation.

Sadly, Americans are far less free than many others around the world when it comes to protecting themselves against the rapidly depreciating US dollar.

Mexican workers can set up accounts denominated in ounces of silver and take tax-free delivery of that silver whenever they want.

In Singapore and other Asian countries, individuals can set up bank accounts denominated in gold and silver.
Debit cards can be linked to gold and silver accounts so that customers can use gold and silver to make point of sale transactions, a service available only to non-Americans.

The obvious solution is to legalize monetary freedom and allow the circulation of parallel and competing currencies. There is no reason why Americans should not be able to transact, save, and invest using the currency of their choosing. They should be free to use gold, silver, or other currencies with no legal restrictions or punitive taxation standing in the way. Restoring the monetary system envisioned by the Constitution is the only way to ensure the economic security of the American people.

After all, if our monetary system is fundamentally sound -- and if the Federal Reserve indeed stabilizes the dollar as its apologists claim -- then why fear competition? Why do we accept that centralized, monopoly control over our money is compatible with a supposedly free-market economy?
In a free market, the government's fiat dollar should compete with alternate currencies for the benefit of American consumers, savers, and investors.

As the Austrian economist Ludwig von Mises explained, sound money is an instrument that protects our civil liberties against despotic government. Our current monetary system is indeed despotic, and the surest way to correct things simply is to legalize competing currencies.

GATA | THE GATA DISPATCH: South Korean central bank says it bought 16 tonnes of gold in July.

South Korean central bank says it bought 16 tonnes of gold in July

Submitted by cpowell on 06:51PM ET Wednesday, August 1, 2012. Section: Daily Dispatches Real gold or paper gold? And who has actual custody of it? Nobody's asking so the central bank isn't telling. So much for financial journalism.
* * *
By Christine Kim
Reuters
Thursday, August 2, 2012

http://www.reuters.com/article/2012/08/02/korea-economy-reserves-idUSL4E...

SEOUL, South Korea -- South Korea's central bank said today it bought 16 tonnes of gold in July as easing financial markets after a turbulent June allowed it to pushahead with efforts to diversify its massive foreign exchange reserves.

It put the total value of the purchase, which was made on multiple occasions during July and boosted its gold holdings to 70.4 tonnes, at $810 million, slightly less than $850 million it spent buying 15 tonnes of gold in November last year.

"The markets were stable in July and we judged the conditions were good for us to make the purchase then," said Lee Jung, head of the Investment Strategy Team at the Bank of Korea's Reserve Investment Division.

 Lee declined to provide the exact net purchase price per ounce it paid for the bullion, typical of most central banks, although he said price was not a major factor in the decision to make the purchases.

Calculations from the total value and volume of the purchase show that the Bank of Korea paid about $1,582 per ounce on average, compared with an average spot price of about $1,592 for the month.

Increased volatility in the global financial markets and falling confidence in the U.S. dollar have persuaded central banks to diversify their foreign reserves away from the U.S. currency and government debt securities.
Central banks became net gold buyers in 2010 for the first time in two decades and have remained buyers since, with an easing of prices this year helping the cause to accumulate more of the safe-haven reserve asset.
South Korea is Asia's fourth-largest economy and its foreign reserves of more than $300 billion ranked the seventh in the world and were equivalent to about 30 percent of its annual gross domestic product.

Gold accounted for 0.9 percent of the value of South Korea's total foreign reserves at the end of July, up from 0.7 percent a month earlier, the central bank said. The total book value of its gold holdings was at $3.0 billion, it added.

The South Korean central bank said it now ranked 40th in the world in gold holdings at the end of July, up from 43rd in June.

It announced the gold purchases when it made a scheduled release of the country's latest foreign exchange reserves data, which edged up to $314.35 billion at the end of July from $312.38 billion at the end of June.
South Korea, the fourth largest economy in Asia, had the seventh largest foreign exchange reserves in the world as of the end of June, of which securities including government bonds made up 91.1 percent, it added.

GATA | THE GATA DISPATCH: Douglas Keenan: My thwarted attempt to tell of LIBOR shenanigans

Douglas Keenan: My thwarted attempt to tell of LIBOR shenanigans

Submitted by cpowell on 08:26AM ET Friday, July 27, 2012. Section: Daily Dispatches By Douglas Keenan
Financial Times, London
Thursday, July 26, 2012

http://www.ft.com/intl/cms/s/0/dc5f49c2-d67b-11e1-ba60-00144feabdc0.html

In 1991, I began trading for Morgan Stanley, the investment bank, in London. I was trading bonds, derivatives, and related securities. One of those securities was based on the three-month Libor rate: the interest rate at which banks can borrow money for three months from each other. Morgan Stanley does not trade on the interbank market so I could not directly borrow or loan money at Libor rates. What I could do, however, was trade a futures contract on the three-month Libor rate.

As an example of how a futures contract works, consider the following. Suppose that we are concerned about three-month Libor rates increasing in the future; in particular, we are concerned about what the three-month rate will be in September. If that rate is, say, 1 per cent, we can agree today to effectively lock it in. If, come September, the actual three-month rate is 2 per cent, then our contract will ensure we can still borrow at 1 per cent. Futures contracts on three-month Libor were -- and are -- traded on the London International Financial Futures Exchange (Liffe, now part of NYSE Euronext). There was a standard contract for the month of September. That contract had its rate settled on the third Wednesday of the month, at 11 o'clock.

In 1991 I had live trading screens that showed the Libor rates. In September of that year, on the third Wednesday, at 11 o'clock, I watched those screens to see where the futures contract should settle. Shortly afterwards, Liffe announced the contract settlement rate. Its rate was different from what had been shown on my screens, by a few hundredths of a per cent.

As a result, I lost money. The amount was insignificant for me, but I believed that I had been defrauded and I complained to Liffe. Liffe explained that the settlement rate was not determined by what rates were actually in the market. Instead, the British Bankers Association polled banks, asking them what the rates were. The highest and lowest quoted rates were discarded and the rest were averaged, giving the settlement rate. Liffe explained that, in doing this, they were adhering to the terms of the contract.

I talked with some of my more experienced colleagues about this. They told me banks misreported the Libor rates in a way that would generally bring them profits. I had been unaware of that, as I was relatively new to financial trading. My naivety seemed to be humorous to my colleagues.

Simply put, then, it seems the misreporting of Libor rates may have been common practice since at least 1991. Although the difference between the reported rate and the actual rate might seem small, the total amount of money involved is material, given that Libor rates affect contracts worth hundreds of trillions. Also important is what such misreporting says about the culture of finance.


During 1991, at the London office of Morgan Stanley, the head of interest rate trading was a person who has been at the centre of the current scandal: Bob Diamond. I do not recall discussing Libor misreporting with Mr Diamond but since the misreporting was common knowledge among traders, I presume he was aware. (That, however, is not a criticism of Mr Diamond: what could he have done about this?)

There have been two distinct motivations for banks to misreport Libor rates. One motivation is discussed above: to directly increase profits. The other motivation arose during the 2008 financial crisis: to mask liquidity problems.
Libor misreporting has been going on for decades. Why have investigations only recently begun? It seems highly implausible that all the investigating agencies could have been unaware for decades. Indeed, the regulators have a reputation among traders of being like Potemkin villages. I suspect what has happened is that, after the financial crises of 2008, the agencies decided they ought to perform more of their stated duties. That would also explain why the investigations appear to be ignoring any misreporting in years before 2005: to cover up the illusoriness of their earlier work.

One of the investigations is being undertaken by the House of Commons Treasury Committee. I telephoned the Committee on July 3 and spoke with a Committee specialist. I told the specialist about the foregoing and said that I was willing to testify under oath. The specialist seemed extremely interested. They said they were to have a meeting about the Libor scandal and would call me back afterwards.
I did not hear back, however, so I telephoned to ask what was happening. My testimony was not wanted, the specialist told me.

-----
The writer is an independent mathematical scientist and a former Morgan Stanley trader.

GATA | THE GATA DISPATCH: GATA files new gold records requests with State, Treasury, Fed, and FOMC

GATA files new gold records requests with State, Treasury, Fed, and FOMC

Submitted by cpowell on 06:36PM ET Tuesday, July 24, 2012. Section: Daily Dispatches 10p ET Tuesday, July 24, 2012

Through its lawyer, William J. Olson P.C. of Vienna, Virginia (http://www.lawandfreedom.com/), GATA today filed federal Freedom of Information Act requests with the U.S. State Department, Treasury Department, Federal Reserve Board, and Federal Open Market Committee, greatly expanding upon GATA's 2009 FOIA request to the Fed, which sought access to records involving gold swaps.

The 2009 FOIA action elicited a revealing admission from the Fed that it has secret and highly sensitive gold swap agreements with foreign banks -- an admission that the Fed, despite its many previous denials, is indeed surreptitiously active in the gold market. That FOIA action led to GATA's lawsuit against the Fed in U.S. District Court for the District of Columbia, which last year produced both a judicial finding that the Fed has many gold-related secrets and a verdict enough in GATA's favor that the Fed was required to pay court costs to GATA:

http://www.gata.org/node/9917
 
GATA's new FOIA requests seek access not just to records involving gold swaps but essentially to all records held by the targeted agencies that involve gold -- for example, in the case of the State Department, records of all international agreements involving the United States and gold.
We're hopeful that these FOIA requests will liberate material as telling as the confession the Fed was forced to make about secret gold swap agreements in GATA's first FOIA case. But of course contending with the likely resistance of the targeted agencies and then taking them to federal court will involve much effort and expense. If you're inclined to help, information about donating to GATA is here:

http://www.gata.org/node/16
GATA's new FOIA request to the State Department is here:
http://www.gata.org/files/GATA-FOI-Letter-StateDept-07-24-2012.pdf
GATA's new FOIA request to the Treasury Department is here:
http://www.gata.org/files/GATA-FOI-Letter-Treasury-07-24-2012.pdf
GATA's new FOIA request to the Federal Reserve Board is here:
http://www.gata.org/files/GATA-FOI-Letter-Fed-07-24-2012.pdf
And GATA's new FOIA request to the Federal Open Market Committee is here:
http://www.gata.org/files/GATA-FOI-Letter-FOMC-07-24-2012.pdf
GATA this week received inquiries from two more reporters for major news agencies seeking information about the rigging of the gold market, inquiries that seem to have been prompted by the secretary/treasurer's appearance on CNBC Asia last month (http://www.gata.org/node/11490) and the LIBOR interest rate rigging scandal. We gave the reporters the basic background about gold market rigging (http://www.gata.org/node/11507) and suggested specific questions they might put to major central banks, questions that are almost certain to prompt refusals to answer and thus to confirm that the central banks are surreptitiously active in the gold market.

We're increasingly hopeful that something will come of this terribly tentative if laughably obvious journalism over the next few years.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

GATA | THE GATA DISPATCH: J.S. Kim: Most gold and silver investors haven't learned to handle volatility

J.S. Kim: Most gold and silver investors haven't learned to handle volatility

Submitted by cpowell on 05:21AM ET Tuesday, July 24, 2012. Section: Daily Dispatches 8:18a ET Tuesday, July 24, 2012

Financial letter writer J.S. Kim says most investors in the monetary metals are not prepared for the volatility caused by market manipulation and lack the patience to buy the dips and hold for the next leg up. Kim's commentary is headlined "The One Personality Trait that All Gold and Silver Investors Need to be
Profitable" and it's posted at his Internet site, the Underground Investor, here:

http://www.theundergroundinvestor.com/2012/07/the-one-personality-trait-...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

GATA | THE GATA DISPATCH: Nick Barisheff: Allocated bullion storage -- Do you really own the bullion?

Nick Barisheff: Allocated bullion storage -- Do you really own the bullion?

Submitted by cpowell on 06:21PM ET Thursday, July 19, 2012. Section: Daily Dispatches 9:15p ET Thursday, July 19, 2012

Bullion dealer Nick Barisheff today earns his tinfoil hat with commentary acknowledging that precious metals exchange-traded funds likely contain assets that have been borrowed and that could fall into dispute during episodes of extreme market stress -- just when precious metals investors will want secure access to their metal. Barisheff's commentary is headlined "Allocated Bullion Storage: Do You Really Own the Bullion?" and it's posted at 24hGold here:

http://www.24hgold.com/english/news-gold-silver-allocated-bullion-storag...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

GATA | THE GATA DISPATCH: MineWeb's Lawrence Williams: It would be surprising if gold market wasn't manipulated

MineWeb's Lawrence Williams: It would be surprising if gold market wasn't manipulated

Submitted by cpowell on 05:51AM ET Thursday, July 19, 2012. Section: Daily Dispatches

Reflecting on the latest report on the gold market by Erste Bank analyst Ronald Stoeferle 
(http://www.gata.org/node/11564), MineWeb's Lawrence Williams inclines even more toward the likelihood that the gold and silver markets are manipulated. Williams writes:

"There are so many hugely interested parties in precious metals price movements -- from both financial and political ends -- that it would actually be remarkable if there was no manipulation or intervention in the gold and silver markets in particular. Indeed, many of the manipulators, or interventionists, would just not see it as such but as a normal part of their day-to-day business.

"The world is at last becoming aware that everything is almost certainly manipulated in some way or another -- particularly by governments and the major financial institutions, which have the political and financial clout to carry this out, to meet their own agendas. But what is acceptable manipulation and what is not?"

 Williams' question has an answer. 

First, market manipulation by private entities is, in most modern economies, against the law, like anti-trust law, though the law may not be much enforced anymore as the West sinks haplessly into corruption and demoralization.

Second, market manipulation by governments is at least morally wrong if it is undertaken in secret to deceive market participants, and in some circumstances freedom-of-information law may be brought to bear against it, as GATA has done:

http://www.gata.org/node/9917

But mere musing is no substitute for journalism. As GATA has compiled and published much official documentation of central bank manipulation of the gold market --
http://www.gata.org/taxonomy/term/21 --

-- the question is really just how far the manipulation extends, and manipulation can be confirmed, reconfirmed, and explored by any news organization willing to put some specific questions about gold to central banks.

Indeed, yesterday your secretary/treasurer was contacted by someone who identified himself as a writer for Seeking Alpha undertaking an essay meant to be critical of GATA and asking a dozen questions about GATA and its work. Your secretary/treasurer answered them cordially enough but added that the writer might perform a better service in regard to gold market manipulation if he could put even half as many questions to central banks themselves, as they have far more information about gold than GATA does, even as they refuse to provide much of it. Your secretary/treasurer offered to supply the writer with questions that most likely would elicit from central banks some very telling refusals to answer. We'll see if he's interested. But for the moment it seems that journalists find GATA far more accessible and accountable than central banks. Even the most respected financial journalists seem to assume that the unaccountability of central banks is to be taken for granted.
Williams' commentary is headlined "It's a Fine Line Between Gold Manipulation and Intervention" and it's posted at MineWeb here:
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=155397&sn=Deta...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.